New Zealanders spent $4.2 billion online last year - an increase of 16 per cent, up from $3.6b recorded a year earlier.
Uptake in online shopping grew 16 per cent in 2018 compared to 2 per cent growth in bricks and mortar retail. Online now accounts for 8.9 per cent of all retail spending in this country, according to NZ Post's latest e-commerce report.
NZ Post chief marketing officer Bryan Dobson said 1.8 million Kiwis - about a third of the population - shopped online last year, with each shopper clocking an average of 22 transactions, or orders, throughout the year.
The state-owned enterprise which processes around 70 million parcels each year found that 44 per cent of those people shopped online more than once a month and spent an average of $100 per order.
Interestingly, New Zealanders now spend more at local online merchants. Growth in online domestic spend increased 19 per cent in the year compared to 10 per cent at overseas merchants.
Approximately $1 out of every $3 is spent with an overseas retailer.
There was an increase of 45 per cent in domestic online spend in the clothing and footwear sector, according to the report.
While New Zealand's online retail spend has rapidly increased, it still lags behind other OECD countries such as Australia, the United States and Britain which account for over 10 per cent and 18 per cent subsequently.
Dobson said NZ Post expected New Zealand to follow the trend and break double-digit online retail spending figures in coming years.
Kiwis aged between 30 and 35 were found to shop online the most and those aged between 45 and 65 spent the most. Those over the age of 70 were also increasingly shopping online, NZ Post said.
"The rapid growth and emergence of buy now pay later was something that stood out this year," Dobson said.
"What we've seen over the last two years is most of the growth comes from people shopping online at a greater frequency. The number of transactions per shopper increased by 10 per cent last year.
"There wasn't a large growth in the number of people who are shopping online but the frequency of transactions is what's driving growth."
Mighty Ape chief marketing officer Gracie MacKinlay said the e-commerce only retailer served "hundreds of thousands" of Kiwis and "shipped millions of product" last year.
MacKinlay was not able to share exact figures but said the Auckland company had experienced double-digit growth in over the past three years, mostly driven by its website sales.
"More Kiwis are adopting online shopping and that's what we're experiencing as well," MacKinlay said. "Kiwi retailers are getting better with online shopping. More and more retailers are now nailing the basics and holding stock for their online orders and offering fast delivery. The range Kiwis can buy online nowadays with fast delivery is now growing - you don't have to look offshore for a lot of things."
MacKinlay said Mighty Ape had noticed a rise in specialist e-commerce stores emerging in New Zealand. "The service they offer is superior to overseas shops which is why domestic is growing much stronger than overseas online shopping."
The rise in shopping at online domestic merchants versus international merchants could also be attributed to local retailers being able to deliver faster, she said.
"It's still early days for online shopping. There's still a lot of growth opportunities to come in the future - it only accounts for 9 per cent of retail - far behind countries like China and the UK."
The rise of buy now pay later services
Deferred payment schemes, often referred to as buy now pay later companies, have been in the New Zealand market little over a year and a half but these ways of payment are experiencing staggering growth.
Afterpay, PartPay, Laybuy and Oxipay launched in New Zealand at the end of 2017. In NZ Post's e-commerce report the payment methods had no recorded impact on the local e-commerce market in NZ's Post previous e-commerce report but Dobson said these companies had last year carved out a new market within the online shopping space.
About 12 per cent of online shoppers used a buy now pay later service last year, NZ Post said, with the majority of users being women under 45.
"The one area we've seen the most growth in the number of customers is in the under 30 market so it seems to have brought a new group of customers to online shopping, and you're seeing more and more businesses signing up in order to access this market," Dobson said.
About 250,000 Kiwis had now signed up to a buy now pay later company, he said.
"The rapid growth of buy now pay later is something that we're really quite surprised by, it shows just how dynamic the online shopping market can be in a 12 month period.
"Forty per cent of all buy now pay later transactions happened in the fourth quarter of 2018 so you can see it really ramp up across the year."
Millennials were most in favour of the payment option, which were increasingly using it as a "budgeting tool" and liked the ability it afforded to split the payment of a purchase into a number of transactions, Dobson said.
More than half of all shopping orders bought online in New Zealand are delivered by NZ Post.